Can equitable distribution of energy meet green concerns?
Government subsidies are often dubbed as inefficient for an economy. While some subsidies may indeed do more harm than good, to argue that all of them are populist, and hence inefficient, is wrong. Recent announcements by the Delhi Government on free metro and bus rides for women and free electricity up to 200 units need to be assessed in the light of this.
However, Delhi is dealing not just with inequality of access to resources, but also with slow death by breath.
A thumb rule for any public policy in Delhi, given the current levels of pollution, should be that the policy at least has a neutral effect on emissions. This means that if it can’t reduce emissions, it should at least not increase them.
To assess the stated objective of the government, i.e. the need to widen access to energy and transport, we look at the consumption expenditure of households in Delhi using the National Sample Survey Office (NSSO) survey (schedule 1.0) of the latest consumption data available, 2011-12.
This data can be used to calculate decile-wise consumption share of Delhi’s population in various goods and services.
A decile-wise classification involves ranking a population from bottom 10% to top 10%.
If, each decile class of the population were consuming an equal share of a given good, then their shares would look like rectangles put above each other. However, if the top decile consumes a significantly large amount than the bottom declies, then the plot would look like a funnel. Charts 1A and 1B give the distribution funnel for Delhi’s consumption of fuel and electricity and transport.
As can be seen, the consumption inequality in transport is much bigger than what it is for fuel and electricity. The richest 10% spend almost 21 times more than those in the poorest decile. This gap is 5.3 times in case of fuel and electricity. (Chart 1A and 1B)
The Delhi government can build a case that it is trying to reduce these inequalities by subsidizing transport and electricity. But as we said earlier, the implications of these policies go beyond just redistribution. What is the role of class in contributing to Delhi’s pollution levels? OECD gives India’s Input-Output (IO) table, which can be used to calculate the direct as well as indirect component of energy (through which carbon enters the system in the first place) used in producing a commodity. This can tell us the carbon content of that commodity.
If we look at the total carbon footprint of these Delhi households, the climate injustice funnel (chart 3) is extremely skewed too with the richest contributing over seven times more emissions than the poorest!(Chart 2)
While the two policy measures of the Government attempt to invert the respective funnels, their effects on the pollution levels will be the opposite. Free rides in Delhi Metro will encourage women to move away from private transport, thereby, controlling emissions to a significant extent. But the same can’t be said about making electricity free.
Given that 70% of Delhi’s power is generated through coal plants, any policy, however egalitarian; that provides free electricity is, going to harm the city and its people by increasing emissions.
In fact, the health impact and other associated costs may outweigh the benefits of equality of access.
Does that mean that the poor have to carry the cross, which is especially unfair since their contribution to emissions is smaller?
Fortunately, greener environment and egalitarian access to transport and energy are not mutually exclusive.
It’s high time that Delhi thinks of a comprehensive plan for making this city healthier and liveable. Many big cities in the world, like London, New York or Beijing, had to act on a war footing to drastically reduce their pollution levels, from conditions under which, much like Delhi, you could not see the sky above.
But the million dollar question is how? And the answer is to tax carbon, period!
Taxing commodities which emit the most, like electricity and private transport, would incentivise self-regulation of consumption practices. The revenue thus generated could finance public transport, and consequently reduce total emissions in Delhi.
However, the policy will fail if people don’t have alternatives to essential services/commodities. The BRT or the odd-even experiment failed, in part, because they were not accompanied by a comprehensive plan for enhancing public transport. Therefore, the sequencing of this policy should be to first overhaul the public transport infrastructure and then tax carbon to finance it.
Delhi residents, including the rich and the wealthy, need to be convinced that the current and future inhabitants of the city, which includes their children, will have a healthier life with a green and egalitarian policy.
No one wants to carry an air purifier or a face mask around the city and no one should, whether you can afford one or not. Londoners and New Yorkers made the sacrifice of giving up on driving when the cost of driving rose significantly. Can’t the Delhiites do the same for their own sake? Shouldn’t government policy nudge them towards such behaviour?
(Rohit Azad is an assistant professor of economics at JNU, Shouvik Chakraborty is an assistant research professor at Political Economy Research Institute, University of Massachusetts Amhrest )